Whole Foods 2007 Annual Report Download - page 65

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million shares of Company common stock that were held in treasury at September 24, 2006 for a total of approximately $100
million. On November 6, 2006, the Company’s Board of Directors approved a $100 million increase in the Company’s stock
repurchase program, bringing the total remaining authorization to $200 million. During the third quarter of fiscal year 2007,
the Company repurchased approximately 2.5 million additional shares of Company common stock on the open market for a
total of approximately $100 million. The average price per share paid for shares held in treasury at September 30, 2007 was
$43.98, for a total of approximately $200 million. Subsequent to the end of fiscal year 2007, the Company retired all shares
held in treasury at September 30, 2007. The Company’s remaining authorization under the stock repurchase program at
September 30, 2007, is approximately $100 million through November 8, 2009. The specific timing and repurchase of future
amounts will vary based on market conditions, securities law limitations and other factors and will be made using the
Company's available resources. The repurchase program may be suspended or discontinued at any time without prior notice.
(12) Earnings per Share
The computation of basic earnings per share is based on the number of weighted average common shares outstanding during
the period. The computation of diluted earnings per share includes the dilutive effect of common stock equivalents consisting
of common shares deemed outstanding from the assumed exercise of stock options and the assumed conversion of zero
coupon convertible subordinated debentures.
A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows (in
thousands, except per share amounts):
2007 2006 2005
Net income (numerator for basic earnings per share) $ 182,740 $ 203,828 $ 136,351
Interest on 5% zero coupon convertible subordinated
debentures, net of income taxes 98 283 2,539
Adjusted net income (numerator for diluted earnings
per share) $ 182,838 $ 204,111 $ 138,890
Weighted average common shares outstanding (denominator
for basic earnings per share) 140,088 139,328 130,090
Potential common shares outstanding:
Assumed conversion of 5% zero coupon convertible
subordinated debentures 116 363 3,414
Assumed exercise of stock options 1,632 5,391 6,446
Weighted average common shares outstanding and
potential additional common shares outstanding
(denominator for diluted earnings per share) 141,836 145,082 139,950
Basic earnings per share $ 1.30 $ 1.46 $ 1.05
Diluted earnings per share $ 1.29 $ 1.41 $ 0.99
The computation of diluted earnings per share does not include options to purchase approximately 10.6 million, 4.3 million,
and 158,000 shares of common stock at the end of fiscal years 2007, 2006 and 2005, respectively, due to their antidilutive
effect.
(13) Share-Based Payments
Share-based payments expense before income taxes recognized during fiscal years 2007, 2006 and 2005 totaled
approximately $13.2 million, $9.4 million and $19.9 million, respectively. Share-based payments expense was included in
the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):
2007 2006 2005
Cost of goods sold and occupancy costs $ 475 $ 264 $ 1,192
Direct store expenses 7,093 3,555 10,092
General and administrative expenses 5,607 5,613 8,612
Share-based payments expense before income taxes 13,175 9,432 19,896
Income tax benefit (4,114) (2,724) (4,454)
Net share-based payments expense $ 9,061 $ 6,708 $ 15,442